There’s nothing worse than signing up for something only to spot a better deal elsewhere once you’ve fully committed. Anyone who’s done this will know how frustrating it can be, but If you’ve found yourself in this nightmare scenario with your car insurance policy, then you’ll be glad to know that all’s not lost.
After agreeing to what’s usually a 12-month policy, many people think they’re locked in and don’t believe they can cancel. The good news is you can.
The bad news is it’s going to cost you. How much will depend on the insurer and what’s printed in the contract, but don’t expect it to be peanuts. Insurers don’t want to see you go, so to stop policy holders jumping ship at the drop of a hat they tend to put financial hurdles in place.
As well as the costs incurred, there are other things you need to bear in mind before you cancel your car insurance policy. Here’s everything you need to know.
How to cancel the policy
This can usually be done by phone or email, but each insurer will have their own specific procedure so be sure to check your terms and conditions as it’ll tell you what to do if you wish to cancel. As mentioned before, insurers don’t want to see you leave so some may make it difficult to cancel. If you’ve made up your mind, stick to your guns and follow the cancellation procedure correctly.
If you cancel your policy by telephone, then it’s a good idea to take the name of the person you spoke to and make a note of when the call took place. If any issues arise in locating your call, then you have this to fall back on.
Costs and refunds
What you’ll have to pay to leave and whether you receive a refund is all down to the insurer and the terms and conditions in your contract. Most policies are usually done on a pro-rata basis, so you’ll pay for the cover you’ve used and receive a refund for the rest of the year, minus the cancellation and administration costs.
It’s free within 14-days
If you’re still within the 14-day cooling off period, then you won’t have to pay anything to leave your contract. It’s a legal requirement for all insurance companies to provide 14-days for you to change your mind, so as long as it’s been 2-weeks or less since you signed up then you’re entitled to a full refund and won’t have to pay to leave your contract.
Some insurers offer longer than the minimum legal requirement, so if more than 14-days has elapsed and you want to cancel then check the terms and conditions as it may still be possible.
How cancelling will affect your no-claim bonus
It’s worth remembering that cancelling your policy before the end of the year will affect your no-claim bonus for that year. If you’ve spotted a great deal, but you’ve only a few months left then it’s probably worth waiting as another year of no claims will mean your premium’s even lower once you’re ready to renew.
Cancelling when buying a new car
If you’ve bought a new car, you don’t necessarily have to cancel your insurance policy. Most insurers will allow you to switch your policy to a new car, although it’s likely to increase the cost and there’ll probably be an administration cost too. Calculate the costs of cancelling your policy and moving to a new one vs the cost of the adding a new car to your current policy and go with the cheaper option.
Depending on your circumstances, cancelling your policy may or may not end up costing you more than you save. As each individual insurer is different, it’s important to check the terms and conditions before you cancel your policy. Once you’ve weighed up the pros and cons, then you can make an informed decision. If you decide to cancel your policy, don’t forget you can compare car insurance with Quote Goat.